Twenty-eight of China’s 31 provincial-level governments announced reduced growth targets and policy goals for 2022 as compared to previous years amidst the country's economic slowdown.
Even more developed regions such as Shanghai, Guangdong and Beijing targeted a lower growth rate of 5-5.5% as against 6% in the previous year, and this was announced before the Ukraine War broke out.
The official claims of the economy having picked up are not matching with the weakening external demand, the Hong Kong Post reported.
President Xi Jinping is particularly worried about the bleak economic outlook of the country as it may adversely impact his bid for another term at the 20th Party Congress later this year.
Local governments across China had ordered teachers and officials to pay back bonuses; civil service bonuses had been suspended in Shanghai, Jiangxi, Henan, Shandong, Chongqing, Hubei and Guangdong.
The demand for bonus reversals indicates that the Chinese government was undergoing something of a fiscal crisis.
The fiscal health of Chinese local governments seems to have deteriorated, especially since the first half of 2020. All the provinces except Shanghai reported fiscal deficits, implying that they expended more than they earned.
Rising unemployment due to pandemic-led dislocations among the youth may dent the popularity of the Chinese government and the CPC. The situation in job market further worsened due to regulatory crackdowns on private tech companies by the government.
Imports increased 15.5%, easing from a 19.5% gain in December and below the forecast 16.5% increase.
“These numbers will probably be well received. China’s exports are high and also the imports are continuing,” said Louis Kujis, Asia Pacific chief economist at S&P Global Ratings, adding that exports remain one component of the economy that are still supporting growth.
“We need to see how long the economic impact (from the Ukraine crisis) will last. China’s economy overall is big and should be to able to continue to grow even in the face of external shocks but export growth will be affected.”
China’s booming exports outperformed expectations for much of last year and buoyed growth in the world’s second-largest economy, but analysts expect shipments to slow eventually as overseas demand for goods eases and high costs pressure exporters.
Beijing has targeted slower economic growth of around 5.5% this year amid an uncertain global recovery and a downturn in the country’s vast property sector. While that would mark a sharp slowdown in annual growth, it is nonetheless an ambitious target that would require more policy support, analysts say.
Chinese exporters with exposure to Ukrainian markets have delayed shipments, while some factories with business in Russia have been waiting for payment from their clients before arranging the next shipments, factory officials and analysts told Reuters.
Tian Yun, former vice director of the Beijing Economic Operation Association, expects China-Europe trade may be disrupted due to the conflict in Ukraine.
“If the Ukraine crisis halts China-EU freight train services or lead to a slower operation efficiency, there will be adverse impact to EU and China’s trade. This might be the biggest risk,” Tian said.
China posted a trade surplus of $115.95 billion in the same period, above the forecast $99.50 billion surplus and December’s $94.46 billion surplus.
READ MORE: France declares “all-out economic war” on Russia without considering retaliatory measures.
